So You Want to Own an Indianapolis Rental Property?


Congratulations! You have made the decision to own a rental!

Maybe you are already in the process of rehab and getting ready to offer the home for rent. Or you are already a landlord and about ready to move on from this posting. So you probably know there is more to owning a rental home than just collecting a check every month.

So, for those who may not realize the challenges, lets discuss and then offer some ways to mitigate these risks.

Local Laws and Codes

Many owners are not aware of the long list of protections your tenants have under the law. These legal rights of tenants and potential tenants can get you in more trouble than any leaking roof.

Qualifying Tenants When You Own a Rental

Seems like good sense when interviewing a potential tenant to not ask questions that are discriminatory. Where landlords get in trouble is not standardizing their acceptance procedures. A landlord might meet potential tenants and just shoot off whatever questions arise after meeting the interested party. There are seven groups of protected classes under federal housing laws (color, race, religion, sex, national origin, familial status, and disability). Many states have their own additional protected classes. Questions along the lines of specifics regarding a protected status might just find you on the wrong side of a government lawsuit.

Security Deposits

Owners collect security deposits and then do what with them? If the owner does not hold a real estate license, most states do not restrict what fiduciary responsibility the owner has with the security deposit. So, owners may use those funds as they choose.

They shouldn’t, but they can. That is where the trouble starts.

Not segregating security deposits and holding them creates a risk that the funds will not be available when the tenant vacates. The owner may try to claim damages to justify not having the security deposit. All states have strict procedures for how a security deposit is to be settled. These include a time line for providing notice that funds will not be returned or actually returning them. Indiana has one of the longer periods of 45 days. Most states are less. If repairs need to be made they need to be made within that window of time so the cost of the repairs can be included in the settlement statement.

Some owners do not follow these procedures. There are tenants that have attorneys on retainer. You will likely get to meet those attorneys.


The biggest problem we see with investors is the desire to save money and maintain or repair their properties with the cheapest materials and labor. Most states have now put together a list of tenant rights and they all include that a landlord must maintain the property to make it safe, clean and habitable. The tenants know they can contact the Health Department and representatives will come and document the unacceptable conditions. The Health Department will then give the owner a deadline for a remedy. The fine an owner may receive after being summoned and wasting half a day at a hearing, are better avoided.

The days are over of saving a few bucks by ignoring or cheaply addressing most maintenance and repair issues.

Liability of Ownership

Finally, some things can’t be prevented. As the owner of the home, you may be found to have liability for an accident that occurs at your home. Minimizing risks like tripping hazards, low hanging electric and other wires, stable hand-rails, etc. are important steps to take.

Nothing replaces having adequate liability insurance. Many owners are mistaken thinking the tenants renters insurance (you did confirm they carry that, right?) will cover liability risks. Unfortunately, while renters insurance polices do have a liability component, it rarely can begin to cover the claim. But the owner has liability for many claims also.

We strongly recommend that owners not just rely on the liability coverage in their Homeowners coverage. For a very small premium, please obtain an umbrella liability policy to protect you is you decide to own a rental.

Mitigate the Risk

In summary, owning a rental is a great decision. Unlike some investments, there is much more to consider than just finding the funds and investing. In order to enjoy the multiple types of returns available when you own a rental, consider taking the following steps.

  • Hire a professional company to handle your leasing and approvals.
  • If you do not hire a professional, then pay an attorney for a current, comprehensive, lease agreement.
  • Maintain liability insurance on the property. Also, invest in an umbrella liability policy.
  • Treat the home like you are living in it.

Professional property management can help take away many of these concerns. A property manager also places a privacy buffer between you and your tenant. They also allow you to enjoy your family dinners and holidays while dealing with the things that go wrong. Unfortunately they will go wrong but the costs can be mitigated and better yet, avoided.

It may be well worth the cost compared to the alternatives.

Get Your Free Rental Analysis
Curious how much your house could rent for? Don’t leave it to guesswork. Fill out the form below for your free, no-obligation rental analysis report.
WILMOTH Group Rental Analysis
WILMOTH Group Property Management